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Bond Report: U.S. Treasury yields edge lower ahead of Sept consumer price index data

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U.S. Treasury yields ticked lower Wednesday, ahead of the September consumer-price index that’s likely to set the tone.

What are yields doing?
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    1.570%

    stood at 1.566%, down from 1.579% at 3 p.m. Eastern on Tuesday.
  • The 2-year Treasury note yield
    TMUBMUSD02Y,
    0.354%

    was 0.35%, little changed from 0.348% Tuesday afternoon.
  • The 30-year Treasury bond yield
    TMUBMUSD30Y,
    2.072%

    declined to 2.073%, compared with 2.106%.
What’s driving the market?

Inflation concerns were expected to be front and center Wednesday, with the focus firmly on the September CPI reading due at 8:30 a.m. Eastern. Economists look for both the headline figure and the core rate, which excludes volatile food and energy prices, to show a rise of 0.3% month over month.

Analysts have said risks around the reading are skewed to the upside, with the potential for a surprise to drive a further increase in yields after the 10-year rate pushed above 1.6% last week.

Read: Global growth outlook is darkening just as the next major U.S. inflation report is about to land

The Fed is already widely expected to announce next month that it will begin tapering its monthly bond purchases.

Minutes from the Federal Reserve’s Sept. 21-22 meeting are due at 2 p.m. Eastern. Fed Gov. Lael Brainard and Fed Gov. Michelle Bowman are both scheduled to speak after the market close on Wednesday.

What are analysts saying?

“On the fixed income side, the U.S. CPI data today will hold sway. We see upside risks but possibly not enough to really cause a big surge in yields,” said Steve Barrow, head of G-10 strategy at Standard Bank, in a note. “Nonetheless, the underlying direction of travel for yields should still be to the higher side.”

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